Labor Relations Update

Attack Falsely Alleging Sandwich Maker Engaged In Unhealthy Practices Not Protected Activity Concludes Appeals Court, Overruling NLRB

Labor disputes are passionate affairs.  Workplace grievances elicit all sorts of strident behavior. When the dispute involves a group of employees, the effect can become magnified.  The exact point at which the stridency of an employee’s behavior becomes unprotected is not always apparent, and like so much else in labor relations, the line changes with the Board’s make-up.  Sometimes the employee’s actions are clearly unprotected as we saw in the recent cases involving the errant human resources representative and in the case of the excitable nurse.  Many times the activity is clearly protected even when it is insulting or profane.  Moreover, the Board is given a high degree of deference by the reviewing courts and it is unusual to see a Board order reversed.

Recently, however, the United States Court of Appeals for the Eighth Circuit denied enforcement of a Board order concerning, among other things, the discharge of employees engaged in a labor dispute with their sandwich maker employer.  Concluding that “the means the disciplined employees used in their . . . attack were so disloyal as to exceed their right to engage in concerted protected activities,” the Court refused to enforce the Board’s order of reinstatement and backpay.  Miklin Enterprises, Inc. DBA Jimmy John’s v. NLRB, No. 14-3099 (8th Cir. July 3, 2017)

It All Started With An Organizing Drive

Employees working at ten Minneapolis area sandwich stores began an organizing drive sponsored by the International Workers of the World (“IWW”).  For those students of labor relations, the IWW has an interesting and colorful history.  An election was held and the union lost.  Objections were filed.  The employer and the IWW settled the case in a manner which would allow for a rerun election within 18 months if the union desired.

A major focus of the organizing was the lack of paid sick days.  The employer had a policy in place which required employees to find their own replacement if they were going to be sick or be subject to termination.

Union Attacks During Flu Season

Sensing an opportunity to highlight the push for paid sick time, the IWW and its supporters used the onset of flu season to pressure the employer.  In late January 2011 the union began  an attack on the employer by creating a poster which contained two identical images of a sandwich.  Above the first image were the words, “YOUR SANDWICH MADE BY A HEALTHY JIMMY JOHN’S WORKER.”  Above the second image, “YOUR SANDWICH MADE BY A SICK JIMMY JOHN’S WORKER.”  At the bottom of the poster contained the text:  “CAN’T TELL THE DIFFERENCE?  THAT’S TOO BAD BECAUSE JIMMY JOHN’S WORKERS DON’T GET PAID SICK DAYS.  SHOOT, WE CAN’T EVEN CALL IN SICK.  WE HOPE YOUR IMMUNE SYSTEM IS READY BECAUSE YOU’RE ABOUT TO TAKE THE SANDWICH TEST.”  [A copy of the actual flyer is attached to the last page of the decision]

The union distributed the poster, a press release and a letter to more than one hundred media contacts, including local newspapers and national news outlets.

The press release stated, “As flu season continues the sandwich makers at this 10-store franchise are sick and tired of putting their health and the health of their customers at risk.”  The press release threatened that if the owners did not meet with IWW supporters about their demands for paid sick leave the supporters would take “dramatic action” by “plastering the city with thousands of Sick Day posters.”

The letter that accompanied the press release contained similar language threatening to put the poster all over the city.  The letter also stated, “By working sick, we are jeopardizing the entirety of [the company’s] image and risking public safety.”

The owner of the franchise met with the IWW supporters and stated the attendance policy was being revised.  The IWW warned that if its demands were not met within ten days the posters would be displayed throughout the area.  The employer revised the attendance policy, which apparently wasn’t good enough for the IWW supporters who then implemented their threat to plaster the city with the posters.

The employer fired six employees who engaged in the attack and issued warnings to three others who assisted.  The attack continued after the discharges with the IWW issuing another press release asserting “It just isn’t safe–customers are getting their sandwiches made by people with the flu and they have no idea. . .” and the “unfettered greed of [the owner]. . .jeopardizes the health of thousands of customers and workesrs almost every day.”

The employer had been cited by the health department only twice, years prior to the dispute, for unrelated issues.

NLRB Decides Employee Actions Protected

A two member majority of the Board concluded “that neither the posters nor the press release were shown to be so disloyal, reckless or maliciously untrue to lose the Act’s protection.”  Noting that the Board has developed “considerably” its approach to evaluation of employee disloyalty, the Board held that “an employee’s public criticism of an employer must evidence a malicious motive” in order to lose the Act’s protection.  One member of the Board dissented.

Full Appeals Court Overrules Board

A divided panel of the Court originally enforced the Board’s order.  The employer appealed to the full court and a ten judge panel heard the case voting 8 to 2 to overrule the Board.

The Court acknowledged that employees have a protected right to communicate with third parties about their dispute.  The Court noted that this protection was limited by Section 10(c) of the Act which states, “No order of the Board shall require the reinstatement of any individual as an employee . . .if such individual or employee was discharged for cause.”  29 U.S.C. § 160(c).

The Court then evaluated the Supreme Court’s decision in NLRB v. Local Union No. 1229, IBEW, 346 U.S. 464 (1953) (known in the labor world as “Jefferson Standard” after the employer).  In Jefferson Standard, the Supreme Court upheld the Board’s decision that the firing of technicians at a television station was lawful because their actions were unprotected.  When bargaining with the union had failed the technicians distributed handbills criticizing the quality and poor programming.  The Board found the actions unprotected because “the gist” of the actions “was that the employer ought to be boycotted because he offered a shoddy product” not because the employer was “unfair” to the employees.”  94 NLRB 1507, 1511.  The Supreme Court, upholding the Board’s ruling these actions were unprotected, decided the case on broader grounds noting that there “is no more elemental cause for discharge of an employee than disloyalty to his employer.”

The Court next evaluated the Board law construing Jefferson Standard.  The Court noted that, “while always purporting to apply Jefferson Standard’s holding, the Board has migrated to a severely constrained interpretation of that decision” which requires that there must exist “evidence of a malicious motive.”  The Court ruled this interpretation “fundamentally misconstrued” Jefferson Standard.  First, “[b]y holding that no act of employee disparagement is unprotected disloyalty unless it is ‘maliciously motivated to harm the employer,’ the Board has not interpreted Jefferson Standard — it has overruled it.”  Second, the Board “refuses to treat as ‘disloyal’ any public communication intended to advance employees’ aims in a labor dispute, regardless of the manner in which, and the extent to which, it harms the employer.”

The Court concluded the Board’s test was an error of law because it effectively removed from the inquiry the central Section 10(c) limitation as defined by the Supreme Court — “whether the means used reflect indefensible employee disloyalty.”  Rather, the correct inquiry is “whether the communication reasonably targeted the employer’s labor practices, or indefensibly disparaged the quality of the employer’s product or services.”

Conclusion and Takeaways

The NLRB rarely cares what an appellate court says and usually just limits a court’s holding as “law of the case.”  However, as we are on the eve of a new Board (the two appointees are set for confirmation later this week), this case might be fodder for a change in the standard requiring “evidence of malicious intent” which is so high as to be nearly impossible to reach.

This case is useful regardless.  It is a good reminder of how standards change with the Board over time, where disparagement of television programming in the 1950’s can be unprotected but a despicable attack on the employer’s public health policies in 2011 is not.  The decision provides an excellent analysis of the interplay between the Act, the Board and the Supreme Court.  It also collects and analyzes the Board’s rulings in this area of the law and can be a good resource and citation.

 

Novel Theory Related To Violation Of Bargaining “Ground Rules” Fails (Fortunately)

When an employer and a union sit down to bargain they often agree to ground rules for how negotiations are to be conducted.  A common ground rule, for example, is for the parties to agree to address “non-economic” items before addressing economic proposals.  Other ground rules include things like confidentiality of negotiations (becoming increasingly rare as unions want to take their case to the public), who at the table has authority to bind the parties, and whether the contract must be ratified by the employees or the International union before becoming effective. Ground rules establish structure to the process.

Can a breach of the ground rules be an independent violation of the duty to bargain?  Recently, the NLRB attempted to prove that an employer’s alleged breach of a ground rule constituted an unfair labor practice.  Fortunately, this effort was rejected.  Anyone who has been at a bargaining table understands that, with minor exceptions, everything in bargaining must remain fluid,–including adherence to the rules.  Parties need to remain flexible in order to reach agreement, which means, of course, that sometimes one has to stretch, if not, deviate from the rules.

In Southcoast Hospitals Group, Inc., 365 NLRB No. 100 (June 28, 2017), the Board was confronted with a contentious round of bargaining that ultimately ended up with the employer declaring impasse and implementing its final offer.  A unanimous Board agreed that the impasse did not exist and the employer’s implementation was unlawful.

What is interesting about the case, however, is the government’s assertion of the allegation concerning the breach of a bargaining ground rule, and the Administrative Law Judge’s analysis concluding no such violation occurred.

Background:  The Prior Collective Bargaining Agreement

The collective bargaining agreement covered nurses working at a hospital.  The agreement provided for step wage increases.  Thus, there was an entry pay level for a nurse which was increased every few months through pay steps as the nurse continued working.  Step increases are distinguished from across-the-board pay increases, which are usually a percentage increase added to the base pay rates one time per year.

The Parties Agree To Put All Proposals On The Table By A Date Certain

At the beginning of negotiations, the employer and the union established some ground rules.  One such ground rule stated:

Neither party will submit new proposals, as opposed to counterproposals, after the fourth meeting, December 17, 2014.  All proposals must be reduced to writing.  For purposes of this ground rule, the first meeting is the meeting held on November 25, 2014.

This kind of rule is sometimes deemed necessary to get all of the issues that are important to the parties out on the table by a date certain so the parties understand the entire universe of issues under consideration.  It also helps to ensure that there are no surprises which could change the calculus of reaching an agreement.

Financial Issues Are The Main Focus Of Bargaining

The parties began bargaining.  A major stumbling block to reaching an agreement was the financial issues.  The employer, citing hard economic times, resisted increasing the financial cost of the contract.  For its part, the union sought additional wages and benefits including, across-the-board wage increases for each year of the contract.  The employer  was “unwavering” in its response that there would be no such wage increases.  The employer continually rejected wage proposals.  Because the employer did not want to increase pay it made no financial proposals.

The Employer’s Package Proposal

After several bargaining sessions spanning over five months, and well after the deadline in the ground rules for making new proposals, the employer made a proposal which contained 12 numbered paragraphs.  The document included signature lines for the parties at the bottom.  Paragraph 11 stated there would be no step increases for a one year period.  According to the union representative, this proposal number 11 caught the union by surprise because the union “was the only one who had put in financial proposals and none of them dealt with step raises.”

Negotiations Break Down -Charges Filed

The parties could not reach an agreement and the employer declared impasse. Ultimately, the employer implemented its proposal.  The employer’s conduct at the table was the subject of many allegations.

NLRB Alleges The Employer’s Proposal To Freeze Step Violated The Act Because It Was A Breach Of The Parties’ Ground Rules

As part of its complaint over the bargaining, the NLRB General Counsel asserted the introduction of the “step freeze” proposal independently violated the Act because it violated the parties’ ground rules.

The Administrative Law Judge disagreed.  The ALJ noted that failure to “adhere to agreed-to ground rules in negotiations may serve as an indicia of unlawful bad-faith bargaining.”  Harow Servo Controls, 250 NLRB 958, 959 (1980).  The ALJ stated that the NLRB “considers the overall circumstances” of the bargaining because the “Board is committed to ‘providing parties with the flexibility to enter into and deviate from new bargaining formats without the risk of being found to have violated their obligation to bargain in good faith’ because this ‘facilitates effective bargaining and encourages productive experimentation.'”  Detroit Newspapers, 326 NLRB 700, 704, fn.11 (1998).

The employer argued that the proposal to freeze the steps was a counterproposal, which was exempt from the ground rules.  The employer also argued that the proposal was not “new” in that it had been orally proposed across the table during one of the bargaining sessions (even though the same ground rule provided proposals had to be in writing).  The General Counsel and union argued that it the employer’s proposal could not be a “counterproposal” because the union’s proposal was for across the board wage increases while the employer’s proposal addressed step increases.

The ALJ brushed aside all these arguments noting they were “somewhat beside the point” and instead zeroed in on the real mechanics of bargaining:

Even if the General Counsel and Union believe that the [employer’s] contentions carry a whiff of the disingenuousness, it is at least colorable to say that the proposal to freeze step pay was offered as a ‘counterproposal’–in response–to the Union’s across-the-wage hourly wage proposal. . .There is no precise definition of the term.  All one can say that [is] with enough inspiration, nearly any proposal made after an earlier one can be termed a counterproposal.

The ALJ then dismissed the allegation.

Board Punts Issue

The General Counsel and union appealed the dismissal.  The Board did not address the allegation noting that any remedy it would order would be “subsumed within the remedy for the unlawful implementation allegation.”

Summary

This allegation represents an attempt by the Board to increase its authority and oversight over parties and over bargaining.  Fortunately, the attempt was unsuccessful.  Had a violation been found, then negotiations for employers and unions would have become less imaginative and more burdensome.  The parties might be reluctant to enter into any ground rules for fear of having them cited against them later.  Or, perhaps worse, the ground rules would become more detailed and legalistic, which would only prolong getting to the real issues of bargaining.

The General Counsel seemed to be taking the position that a counter-proposal must match a proposal from the opposing party.  Thus, if the union’s proposal was about wage increases, then any counter must also be about wage increases and not step increases.  Were the government to prevail on such a notion, then it would require parties to act in a manner that is too rigid.   In labor negotiations, a party making a counter-proposal may not be willing to move at all on the issue that is the subject of the main proposal but will counter with something different to show its willingness to move in another area as a sign of its intent to reach an agreement.

The case is interesting because it caused the ALJ in his analysis to articulate the realities of bargaining.  It was clear the ALJ did not believe the employer’s rationale but was unwilling to call the proposal a violation of the law, let alone a breach of the ground rules.  The ALJ’s analysis provides a good basis for understanding the interplay between ground rules and actual bargaining.  Parties that agree to ground rules almost always use them to advance their position.  Thus, the “inspiration” noted by the ALJ is what drives negotiation, and what makes it an inherently fascinating process.  Thus, for example, parties often cast non-economic proposals as economic based on an imaginative description because doing so helps move the pieces around to get an agreement.  Attempting to apply rigidity to the process through an allegation such as this would only dampen imagination, and might make reaching an agreement more difficult.

As the saying goes, sometimes rules are meant to be broken.  This seems to be such a case.

Case Demonstrates Perils Of Refusing To Discuss Issues With Union

A significant change in NLRB precedent during the last few years was the added requirement that an employer bargain over discretionary aspects of discipline in the period between the union acquiring representational rights and the first contract.  Given the limited set of circumstances one doesn’t see a whole lot of these cases.  A recent NLRB case, however, demonstrates how problems can arise by a failure to discuss discipline/discharge with the union at any stage.  In a broader context, the case shows why,– if there is some chance an obligation to bargain exists, even a slim one,– that it is probably better to have the discussion with the union.

In Security Walls, Inc., 365 NLRB No. 99 (June 15, 2017), the employer, a security contractor, provided armed guards at an IRS facility in Austin, Texas.  When the employer took over the contract it started to bargain with the union but did reach agreement until 13 months later.

Pre-Collective Bargaining Agreement Disciplinary Policies

While the parties were bargaining, the employer posted at the workplace portions of its contract with the IRS that listed, among other behaviors, “neglect of duty” as grounds for “immediate removal” from the workplace.  Sometime after this posting, the employer posted a “Disciplinary Action/Policy Statement” which “supersedes all other policies on this subject.”  This latter document posted a progressive discipline system which listed specific violations and corresponding disciplinary actions.  As to breach of security, the conduct is treated as a third-level (2-day suspension) or fourth level (termination) of discipline based on previous offenses.”

Three Guards Are Suspended, Then Terminated

In two separate incidents, three guards became distracted and members of the public wandered past security into the IRS facility.  In response, the employer suspended the three, one of whom was the union president.  The union president responded with a written request for information about the suspensions, which included the following statement, “As Local Union President, I have some issues I needed [sic] to address regarding my and [the other guard’s] suspension.”

The IRS was notified of the incidents.  In an exchange of emails the IRS indicated that the guards “must be able to multi-task and recognize what is going on around them” but did not request the removal of the guards.

The guards filed a grievance protesting the actions and stating, “”The Union and the Company must work sincerely and wholeheartedly to the end, that the [policies] be applied and interpreted fairly and conscientiously, without discrimination, and to the best interest of efficient security operations of the client.”

A supervisor informed the guards that they were terminated.  However, the next day, the employer’s in-house counsel sent the union a letter stating that the guards were not terminated and that a “final decision” would be forthcoming.  The letter concluded:  “This is not an offer to bargain nor is it an offer to invoke the grievance procedure.”  The parties had tentatively reached agreement on a grievance procedure but had not yet completed negotiations.

The union emailed the employer demanding reinstatement and threatening to file NLRB charges if the demands were not met.  When the employer did not respond, the union filed charges.

Administrative Law Judge Finds Violation

The Administrative Law Judge ruled that the employer violated its obligation to bargain because it failed to bargain “on request” of the union and that the disciplinary policy was unilaterally changed because it called for suspension.

Board Majority Finds Employer Unilaterally Changed Its Disciplinary Policy and Unlawfully Refused To Bargain

On appeal a two person majority of the Board (Pearce and McFerran) affirmed the judge’s findings.  The Board found that the disciplinary policy warranted only a suspension, and that the employer’s departure from the policy constituted a unilateral change in a term or condition of employment.

The Board also found that the employer refused to bargain following the discharge of the guards.  The employer had asserted that the parties had tentatively reached a grievance procedure in negotiations, and therefore, the obligation to bargain was satisfied.  The Board rejected this defense based on the fact that the overall agreement had not been reached and that the employer’s response to the union rejected any notion that the matter was being treated pursuant to the grievance procedure.

The Board also addressed an issue raised by the Chairman Miscimarra in his dissent that the union had not demanded bargaining.  The Board majority rejected this assertion asserting that the “Board has never required a union to employ some combination of magic words to express a request to bargain.”  Thus, in this case, the union president’s statement that he had some “issues he needed to address” concerning his and another guard’s suspension was sufficient.  Further, the union’s statement in its grievance that the “Union and Company must work sincerely and wholeheartedly to the end…..” constituted a request to bargain.  Finally, the union’s threat to file an unfair labor practice charge, and the fact that it did, also added up to a demand to bargain.

The NLRB ordered reinstatement and backpay for the guards.

Dissent Takes Issue With Bargaining Violations

In his dissent Chairman Miscimarra asserted that there was no violation to the duty to bargain.  Miscimarra stated that there was no unilateral change in policy.  While the disciplinary policy said it superseded prior “policies” the employer’s contract with the IRS, which was posted and required immediate removal for neglect of duty, was not a policy but a contract binding on the employer.

Miscimarra also stated that the violation concerning post-discharge bargaining deprived the employer of due process because no such allegation was contained in the complaint.  Finally, Miscimarra noted that according to Board law a “Union’s objections, protests and threats to file a Board charge are not sufficient under Section 8(a)(5) to constitute a request for bargaining.”

Summary – Discussion Beats Litigation

This is one of those odd cases where the Board appears to be definitively interpreting a policy when it is clear no such interpretation can be applied.  Thus, the Board found a unilateral change had occurred because the policy clearly called for suspension.  However, it could be argued that the policy actually gave the employer discretion to decide which level to apply and that prior misconduct was a consideration for the employer, not that prior offenses must exist to impose discharge.

Whenever a termination case at the NLRB asserts that the violation is a failure to bargain the underlying conduct of the employee typically is not being challenged.  The vast majority of NLRB discharge cases involve an allegation of unlawful motivation,–the employer terminated the employee because of his or her protected activity; no such unlawful motivation was asserted here.  Here, there was no dispute that the guards did what was alleged:  they allowed members of the public to wander unchallenged into a secure IRS building.

When the discharge case involves only a refusal to bargain, then the government is saying the employer should have sat down and discussed the matter before taking any final action.  Under the contract with the IRS such conduct by the guards arguably warranted immediate removal; under the employer’s disciplinary policy the guards’ conduct arguably warranted a suspension or termination.  Had the employer sat down to discuss the matter with the union it may very well have deprived the union of any grounds for asserting the terminations were unlawful.  As we have seen in other contexts, an employer’s assertion that it had no obligation to bargain is risky.  The time and expense associated with bargaining (which could easily result in the terminations being validated) as opposed to undertaking litigation is something that should be considered before taking a position that there is no obligation to bargain.

Out With A Whimper: DOL Moves To Rescind Persuader Rules

As we reported last month, the DOL was considering what to do with the enjoined persuader rules, new regulations that would have drastically changed the interpretation of the advice exemption to the LMRDA reporting requirements.  In sum, the new rules effectively narrowed the advice exemption to require reporting of a number of activities that had clearly fell within the exemption for some 50 years.

Earlier this week, the Department of Labor published a notice of its intent to rescind the persuader rule:  Rescission of Rule Interpreting Advice Exemption, 82 Federal Register 26877 (June 12, 2017)  The notice states the proposed rescission is “part of the Department’s continuing effort to fairly effectuate the reporting requirements of the LMRDA.”

The reason given behind the rescission is that it “it would ensure that any future changes to the Department’s interpretation would reflect additional consideration of possible alternative interpretations. . .and could address the concerns that have been raised by the reviewing courts.”  As to this latter consideration, the rule change was enjoined by a federal court last year and never went into effect.

Comments on the proposed rescission are due on or before August 11, 2017.  This action by the Department of Labor isn’t terribly surprising given the change in administration and the opposition to the rule change.

Circuit Court Rejects Attack On NLRB’s New Witness Rule

During the last several years, the NLRB has overturned a great deal of existing precedent.  Among other changes, the Board has required bargaining over discipline in newly organized units, found graduate students to be employees entitled to organize, and found that two employers may have to bargain together.  The Board also changed the longstanding rule that witness statements do not have to be produced n in response to a union’s information request.  The witness statement case as originally reported was issued by a two person Board in 2012 and ultimately was overturned by the Supreme Court’s New Process Steel case.  The NLRB, never one to let go of a good change in precedent, simply reissued the decision in American Baptist Homes of the West, 362 NLRB No. 139 (2015).   Then Member Miscimarra dissented (which means this rule could be overturned in the coming months).

It Started With An Investigation

The employer started an investigation of a nursing assisting suspected of sleeping on the job.  The employer talked to three employees.  Two of the employees were reluctant to discuss what they saw and the employer assured them of confidentiality.  Those two employees gave statements.  A third employee, a charge nurse, gave a statement voluntarily as it was part of her duty to provide reports. The union representing the employees asked for all witness statements.  The employer refused, and in its letter rejecting the union’s request, it cited the existing case law, which provided a bright-line rule that the duty to provide information did “not encompass the duty to furnish witness statements themselves.”  Anheuser-Busch, Inc., 237 NLRB 982, 984-985 (1978).  The union filed charges which led to the rule change in the two subsequent Board decisions.

The Board Overrules Anheuser-Busch But Only Prospectively

In reiterating the new rule, the Board applied it prospectively.  In particular, the Board noted that the two employee statements obtained after assurance of confidentiality were “witness statements” that did not have to be disclosed.  The Board concluded the employer had expressly relied on the existing law even citing it in its letter to the union and it would not be fair to apply the new rule in these circumstances.  As to the third, voluntarily provided statement, the Board ruled that because it was part of the nurse’s job duties to provide statements it was not a “witness statement” and therefore, the employer’s failure to turn it over constituted a violation of Section 8(a)(5).  The employer appealed the case to the D.C. Circuit Court of Appeals.  The NLRB cross-petitioned for enforcement of its decision.

Court Rules Employer Lacks Standing To Challenge NLRB’s New Rule

In American Baptist Homes of the West v. NLRB, No. 15-1445 (D.C. Cir. June 6, 2017) the court upheld the NLRB’s decision. The court noted that the two witness statements that the Board did not require disclosed were not at issue, and only the third statement was subject to the appeal.  The employer argued that the Board had impermissibly departed from its longstanding witness statement case law.  The court disagreed, noting that “witness statements” as defined by Anheuser-Busch and its progeny stand for the proposition that an assurance of confidentiality “must have motivated the witness in order to bring the statement within the protection of Anheuser-Busch.”   In other words, the third employee’s statement did not qualify as a “witness statement” even under the old rules but was more of a business report.

The employer also challenged the new rule “notwithstanding that the [Board’s] decision will apply only in future cases.”  The court rejected this claim noting that “a party generally lacks standing to challenge adjudicatory rulings that have not been applied to it.”

Summary

The case serves to highlight one of the bigger changes to the law in the last few years.  By disposing of the bright-line rule that witness statements need not be disclosed in an information request the Board erased a major area of certainty in employer (and to a lesser extent, union) investigations.  Had the employer prevailed in court it likely would have made very little difference beyond the case in question, as the NLRB does not often pay much attention to court of appeals decisions.

Change to this rule likely will be addressed in the coming months as a new NLRB takes shape.

NLRB Settlements Can Be Tricky, Especially If You Don’t Inform The Agency

The last few decisions issued by the NLRB have addressed a wide spectrum of rather unique situations.  Just in the last several days we saw decisions involving a combative registered nurse and a human resources representative threatening unionization.  So, perhaps, one of the Board’s most recent decisions is not all that unusual….it simply involves a case where parties to an unfair labor practice proceeding sought to have the matter withdrawn two years after settlement, and after the NLRB had ruled on the merits of the case.  It appears no one let the agency know the matter had been settled.

Once an unfair labor practice charge is filed, any settlement of the matter must be approved by the agency, even if it is a “non-board settlement,” a private settlement agreed to by the non-agency parties.  This is because unfair labor practices charges ultimately are to vindicate the public policy under the National Labor Relations Act.  The agency generally evaluates the terms of the non-board settlement based on the standard of whether the agreement will “effectuate the purposes and policies of the Act” pursuant to factors set forth in its decision in Independent Stave Co., 287 NLRB 740, 741 (1987).  These factors include whether the parties voluntarily entered into the agreement and whether it “substantially remedies” the unfair labor practices alleged in the complaint.

In Food Services of America, Inc., 365 NLRB No. 85 (May 26, 2017) the Board evaluated a non-board settlement made under unusual circumstances.  The case concerned a matter that started in 2011 when the employer discharged two employees, boyfriend and girlfriend.    The girlfriend had been fired for using an instant messaging application to assist a co-worker having a problem with a supervisor.  After she was fired, the girlfriend asked her boyfriend to help develop a case against the employer.  Boyfriend went above and beyond and forwarded to his girlfriend hundreds of company emails to her private account, many of which contained confidential information about employer’s vendors and customers, product prices and product specifications.  After employer discovered boyfriend’s actions, he too was terminated.  The couple filed charges alleging their terminations were unlawful.  The NLRB alleged both discharges were motivated by protected activity in violation of Section 8(a)(1).

Litigation Over the Emails – 2013

While the NLRB litigation was pending, the employer sued both employees in federal court alleging violation of the Arizona Trade Secrets Act.  The U.S. District Court found that both boyfriend and girlfriend had misappropriated trade secrets.  A trial was scheduled over the damages.

Employer And Couple Reach Settlement – February 2014

Facing damages for the misappropriation of the trade secrets, the boyfriend and girlfriend were more inclined to reach a settlement with employer.  The couple and the employer entered into a global, non-board settlement that resolved the unfair labor practice charges and the email litigation.  As part of the settlement, the unfair labor practice charges were to be withdrawn.  Settlement was reached three months prior to the Board issuing decision.  None of the parties to the settlement informed the Board.

Board Issues Its Decision In Termination Case – May 2014

The Board, oblivious to the global non-board settlement, decided the unfair labor practice case (reported at 360 NLRB 1012).  It found the girlfriend’s discharge was unlawful because she was engaged in concerted protected activity when she advised a co-worker using instant messaging on how to deal with the supervisor (even though, ironically, the co-worker caused discharge by showing the instant messages to the supervisor).  The Board determined, however, that the boyfriend’s conduct was not protected and that his termination was unlawful.

Parties Seek Withdrawal Of Charges

A two member majority (Miscimarra and Pearce) approved the withdrawal.  Although they noted their “displeasure” with the fact the charging parties and employer had not let the Board know about the settlement, they nonetheless found settlement was appropriate because:

(1) the Charging Party, the individual discriminatees, and the Respondent have all agreed to be bound by the settlement; (2) the settlement resolved not only the present unfair labor practice charges but also related state law claims by the Respondent as to which a court had previously granted summary judgment against the alleged discriminatees and had scheduled a trial to determine economic damages; (3) the General Counsel, the official charged with prosecuting claims under the Act, moves the Board to give effect to the settlement and to remand the case for approval of the Charging Party’s withdrawal request [and no opposition was filed]; the risks inherent in continued litigation. . .; (5) the long passage of time since the events in question took place; (6) the absence of fraud, coercion, duress in securing the settlement; and (7) the absence of proof that Respondent has a history of violating the Act or breaching settlement agreements.

Member McFerran dissented, noting that the “General Counsel won this case . . . in important part.  He now seeks to abandon it. . .”  Although the majority did not outline the terms of the settlement, McFerran’s dissent gives some insight that the boyfriend and girlfriend probably were not compensated nor were they offered reinstatement:  “That settlement provides no remedy at all for the violations of the National Labor Relations Act that the Board found.”

Takeaways

The facts of this particular case are unusual in that the boyfriend and girlfriend were facing monetary damages in a separate proceeding for their actions with respect to the email.  Most non-board settlements will require some kind of remedy to the underlying unfair labor practice charges in order for the agency to approve the settlement.  When attempting to settle Board litigation privately, bear in mind that in order for the Board litigation to be resolved, approval must be obtained.  That is why it is a good idea to condition the settlement on approval by the Regional Director or Board because one would hate to enter into an binding agreement only to have the Board refusal approval (which happens).

Oh, and it’s probably a good idea to let the Board know that you’ve settled the matter.

HR Generalist’s Threat To Bring In Union Not Protected, NLRB Rules

One of the most interesting things about labor relations is the unusual situations human resources professionals have to deal with on a day to day basis.  If you are at a cocktail party with a human resources professional, ask them what the most unusual thing they’ve ever encountered on the job and chances are you’ll hear something truly unique and interesting.  The inherently human element makes for good story telling because you really can’t make some of this stuff up.  The NLRB recently was confronted with a situation where an HR Generalist, — a person hired specifically to review and help keep an employer in compliance with labor and employment laws,– took the knowledge he gained to immediately threaten the employer with, among other things, bringing in a union if the perceived problems were not corrected.

In Matrix Equities, Inc., 365 NLRB No. 69 (May 15, 2017) the employer had a vacancy in its human resources department and in an employment advertisement, placed by the Office Manager, sought “an ambitious HR professional to assist in the overall operations of the HR department . . .who is willing to go above and beyond  in the best interests of the company.”  Among the skills required for the job was familiarity with “employment laws and human resources topics, recruiting, interviewing applicants and payroll entry.”  The employer was growing and wanted to hire someone who was knowledgeable enough to make sure it was in compliance with workplace laws.

Enter HR candidate Charging Party whose resume stated he “was well versed in analyzing and executing recruitment strategies and human resources functions and had a ‘compliance mindset.'”  During Charging Party’s interview the Office Manager informed him that part of his job was to review employer’s workplace practices “for the purpose of achieving compliance with the law.”  Charging Party assured the employer that he had conducted internal audits and possessed the requisite knowledge.  Charging Party was hired and was given access to the employer’s payroll systems and background services; Charging Party also received keys to the employer’s filing cabinets containing all personnel files.

Employer’s Office Manager told Charging Party that she would like the process of background checks reviewed for “red flags.”  Charging Party immediately raised a red flag, his own:  that he had previously pled guilty to larceny. Although Charging Party had revealed this information on his application, Office Manager was not aware of it, and testified that had she known, she would not have hired Charging Party.

Charging Party then reviewed personnel files and payroll information.  Charging Party drafted a lengthy letter to Office Manager in which he stated he “had major concerns about the workplace.”  Charging Party asserted one of the employees was a racist.  He also took issue with another employee’s playing a radio station with “uncensored music.”  Charging Party noted that the employer’s paid time off policy was “sub-par” because employees were making less than the average demographic salary.  Charging Party complained that he and other employees were mis-classified as exempt under the Fair Labor Standards Act.  As a solution, Charging Party stated that he “ha[s] and will continue to give serious thought in regards to contacting the NLRB and attempting to organize and eventually form a union (sic).”

Charging Party’s letter continued:  he addressed his prior criminal conviction and alleged that one of the employer’s managers was “age- and sex- biased.”  Charging Party concluded his letter by noting the workplace issues were “very serious” and had “deeply affected” him.  Finally, Charging Party asserted he would “not tolerate them anymore.”  It was undisputed that Charging Party had not discussed any of the concerns raised in the letter with other employees.

After reading the letter, Office Manager told Charging Party he was not a team player and fired him.  Charging Party filed charges with the NLRB, which issued complaint.

General Counsel’s Theory and the Judge’s Decision

The General Counsel asserted that Charging Party’s termination was a preemptive strike under Parexel International, LLC, 356 NLRB 516 (2011) to prevent Charging Party from engaging in statutorily protected conduct.  Under Parexel, the General Counsel has the burden of proving the adverse action was motivated by an intent to suppress protected activity.  The Board’s holding is designed to prevent against employers building “a dam at the source of supply” of potential protected activity, by acting against an individual the employer believes may start engaging in protected activity.

The Administrative Law Judge rejected this theory, noting that Charging Party never discussed any of the concerns raised in his letter with other employees.  The ALJ concluded that Charging Party “was interested only in protecting his own job by threatening to initiate a variety of legal actions and that he had no interest in promoting, supporting, or assisting other employees in seeking to address any of those issues.”  The ALJ recommended dismissal of the claim.

The General Counsel appealed.

NLRB Concludes Charging Party’s Actions Were Personal And Not Protected

A unanimous Board upheld the ALJ and found no violation of the law.  The Board noted that Charging Party was hired because of his compliance experience and “he and [the employer] shared an expectation that he would bring to [Office Manager’s] attention instances of potential non-compliance” so that the two could work together to find a solution to the problems.

The Board noted that Office Manager’s initial reaction to the letter was positive “because [Charging Party] had found areas in need of improvement–because he was hired to do just that.”  Office Manager’s pleasure soured as she continued to read the letter realizing that “[Charging Party] was not raising the issues to her so that they could work together” but that she was “taken aback” by what she felt was Charging Party’s betrayal of the company and her by “pursuing a course of action plainly inconsistent with the basic purpose for which [the employer] had hired him.”

The Board found it significant that there was no evidence that Office Manager harbored any animus toward protected activity or that the discharge was to prevent Charging Party from occurring in the future.  The Board noted Office Manager did not try to find out if Charging Party had talked to other employees nor did she accuse him of “stirring up” activity.  Thus, there was no evidence to support the theory that the discharge was preemptive.

The Board saw no protected activity at all.  Instead, the Board noted that, after being employed for about two weeks “and without having spoken to any of his coworkers about the issues raised in his letter,” Charging Party presented a letter that contained a range of information, the “vast majority of which did not touch on Section 7 activity.  Instead, the letter addressed Charging Party’s “individual impressions and complaints” as well as his obvious concern that he might be fired for his prior criminal conviction.

The Board noted that Charging Party’s letter offered no solutions to the problems he raised and “was drafted in a manner plainly inconsistent with the purposes and duties for which” he was hired.

Lessons Learned

The scenario presented in this case is a potential nightmare for employers.  A person who is hired to assist with compliance, and who has access to all personnel information, threatens to take action.  It seems clear that the manner in which the Charging Party was hired, and ultimately fired, give good insight into navigating a potentially risky situation.  There was evidence that the Charging Party was hired in large part to help address any potential compliance issues, — and although Charging Party seemed to spot issues well, by not offering any solutions he just didn’t do his job.  By threatening to take all sorts of actions Charging Party clearly was acting disloyally.  As to the manner in which Charging Party was fired,– for the contents of his letter and nothing else,– meant that the only evidence of protected activity was the mention of the word “union” in the letter.  Charging Party did not talk to other employees and the employer did not inquire into whether he did. As we recently saw, an employee’s mere invocation of the word “union” does not cloak the activity with the Act’s protection. The employer also did not couch the termination in terms that might give rise to a claim under the Act.  Rather, the employer merely ended the employment of someone who was not doing the job they were hired to do.

You can’t make this stuff up.

Union Adherent’s Antics Not Protected By Act, NLRB Rules

The NLRB recently issued a rare decision completely dismissing all allegations against an employer; rarer still because it was unanimous.  In Brooke Glen Behavioral Hospital, 365 NLRB No. 79 (May 15, 2017) the NLRB was confronted with a situation where an employee-union adherent engaged in behavior ultimately found to be inappropriate and unprotected.

The employer, a hospital treatment center for patients with severe emotional and mental problems, recognized a nurses’ union as representative of registered nurses at the facility (“Union”).  The mental health technicians working at employer’s facility were represented by Teamsters.  There was an attempt by the Union to raid the Teamsters unit and cause the technicians to change representation; this attempt was led by a registered nurse.  These kinds of efforts can cause a great deal of friction in a workplace because the employer has legal obligations to both unions.

Registered Nurse Engages In Strident Actions

During a bargaining session between the Union and the employer, the registered nurse brought several Teamsters-represented technicians to the meeting as “witnesses.”  The employer objected to the presence of the technicians.  When the technicians remained, the employer left the meeting.  The Union and the employer met the next day for bargaining and no technicians were present.

Within a couple of days after the bargaining incident, the employer was conducting a tour of its hospital for managers and staff from a sister facility.  During the tour, the group visited the unit where the registered nurse worked.  The registered nurse immediately started screaming demanding to know “who the visitors were and why they were there.”  An adolescent patient was in the vicinity of the exchange.  When the employer representative leading the tour did not respond, the registered nurse started asking the visitors why the she was barred from visiting the sister hospital.  Apparently, registered nurse and a Union official had made an attempt to visit the sister hospital and were denied access to the facility.

The registered nurse kept asking the visitors why she wasn’t allowed to visit their hospital.  As the tour was winding down in the parking lot of the hospital, the registered nurse approached the group and pointed at the leader of the tour saying, “this one don’t do sh%t, she ain’t sh%t.  She walks around here with an air. . . .I am going to get you the f*ck out of here.”

The employer decided to terminate the registered nurse for her unprofessional conduct.

The Union filed charges alleging that the employer’s cancellation of the bargaining session violated Section 8(a)(5) of the Act as a breach of its good faith obligation to bargain.  The Union also claimed the registered nurse’s termination was motivated by protected activity in violation of Sections 8(a)(3) and (1) of the Act.

Cancellation Of Bargaining Session Not A Violation Under The Circumstances

The Administrative Law Judge dismissed the bargaining cancellation allegation.  The Judge noted that the “cancellation of bargaining sessions is an indicia of a failure to bargain in good faith, although ordinarily much more than a single isolated cancellation of a bargaining meeting is required before a violation is found.”  The ALJ considered that the circumstances present in the case, – the invitation of members of a different union who were the subject of a raiding attempt,– was not the most conducive to good faith bargaining:

Although, as shown above, parties are generally permitted to select their own bargaining team, that does not necessarily include the selection of ‘observers’ who are not members of the bargaining team and have nothing to add to the bargaining.  Extending bargaining to such observers–by either side, over the objection to the other–would raise the potential for mischief and serious interference with good-faith bargaining.

The ALJ noted that it is one thing for a union to engage in organizing another union’s employees but “it is quite another to take that fight to the bargaining table involving a separate unit.”  The Board affirmed this finding on appeal

Discharge Of Registered Nurse Was Not For Protected Activities

The General Counsel alleged that the registered nurse’s termination was motivated by her protected activity, mainly her behavior during the bargaining session.  The ALJ found that the General Counsel had not satisfied his burden of establishing that the termination was motivated by protected activity, noting that there was no linkage other than timing between the bargaining session and the tour.  The Judge noted that although the employer’s attorney objected to the presence of outsiders, there was no reaction at all related to the registered nurse.  The ALJ found the “real motivating factor for the discharge was an independent set of circumstances completely divorced from any union or other protected activity –[registered nurse’s] unprovoked misconduct that interfered with a legitimate tour group.”

The ALJ also considered whether the conduct of the registered nurse was protected requiring an analysis of whether it became unprotected.  The ALJ concluded that no protected activity occurred:

[the incidents] did not involve protected concerted activity by [registered nurse] or anyone else.  [Registered nurse] was at work during two of the confrontations; and the third took place after work in [the employer’s] parking lot.  The tour and its aftermath were not an invitation for her to interfere with the tour so as to turn those acts of interference into protected activity.

The ALJ also seemed swayed by the fact the registered nurse “perceived the tour as somehow related to her union activity.  But protected activity must be based on objective fact, not subjective perceptions of the party or witness making the claim.”  In other words, an employee cannot immediately cloak conduct in the protection of the Act by making claims related to union activity (here, the attempt to visit a different hospital) that do not relate to an ongoing dispute.  The conduct must be related to the employee’s own terms or conditions of employment.  Yelling at a tour group because of a perceived slight at a different hospital does not fit into that category.

Takeaways

In the age of corporate campaigns, where the aim of conduct is often simply to cause irritation in the hopes of pressuring the employer for a larger goal, Brooke Glen Behavior Hospital offers good insight into how to respond to these actions.  Bringing outsiders of any kind to a bargaining session can be disruptive and arguably is evidence of bad faith.  In some of the more contentious bargaining situations politicians, clergy, and other public figures are invited as “witnesses” despite the fact the sole purpose of having such individuals attend is to pressure the employer.  Here, the employer did not overreact.  Although the employer did not continue the bargaining session it was faced with a real dilemma:  permitting the technicians on this one occasion might open the door to the Union bringing these employees,–who were represented by a different union,– to more sessions.  The employer made its point and then continued bargaining the very next day.

The registered nurse’s behavior towards the tour group is a trickier issue.  As we have noted, actual protected activity can take very strident forms and not lose protection of the Act, even in cases where the language used is vulgar.  Had the registered nurse used profanity towards a manager while expressing a legitimate workplace grievance and no outside visitors, customers or clients were present there is llittle doubt this conduct would be protected.  Also, the fact the registered nurse here acted alone does not always mean it is not “protected concerted activity” because in the right circumstances a single employee’s actions can be protected.  What is significant in this case is that the registered nurse aimed her activities at a tour group, visitors who were not involved in any workplace dispute, an object that had no other purpose than to vex the employer.  This might very well be a different outcome if, for example, the registered nurse targeted a tour of people who were set to take bargaining unit jobs.

 

NLRB’s Micro-Union Standard May Be Set For Reversal

Change is coming.  We noted recently that the administration is thinking about changing the newly adopted persuader regulations.  We also know that a majority of make-up of the NLRB is likely to shift very soon, and with it some of the precedents of the last few years will be reversed.  Newly appointed Chairman Miscimarra seems to be reiterating what he’d like to see changed through his dissents in recent cases.

In Cristal USA, Inc., 365 NLRB No. 74 (May 10, 2017), a Board majority denied an employer’s request for review of a Regional Director’s decision about a bargaining unit.  In the decision the Regional Director approved a unit of warehouse only (the unit sought for by the union) and rejected the employer’s contention that the unit should include the production employees in the plant as well as the production employees working in the employer’s plant across the street.  In finding this smaller, discrete unit appropriate, the Regional Director applied Specialty Healthcare and Rehab. Ctr of Mobile, 357 NLRB No. 83 (August 26, 2011).  Specialty arguably is the most significant decision issued in the last few years as it upended years of Board law in favor of a standard that almost guaranteed that the bargaining unit sought by the union in its petition would be found to be an appropriate unit.  If the group of employees sought by the union is identifiable then the only way the employer can prove that a larger unit was appropriate is to establish the employees it seeks to add shared an “overwhelming community of interest” with the petitioned-for employees.  It is not surprising that since Specialty issued, very few cases have resulted in a larger bargaining unit.  Indeed, the standard has resulted in some odd decisions.

In Cristal, Chairman Miscimarra signaled his intention to re-visit, and perhaps reverse, Specialty, noting that he thought that decision was “wrongly decided.”  Miscimarra noted that there was evidence of that the employees working in close proximity at the employer’s two plants shared a very common interest in that they all were part of an integrated employer operation.  We will keep you posted on any developments.

Signs Point To Change In Government’s Position On New (But Currently Enjoined) Persuader Rule

The fight over the Department of Labor’s attempt to “clarify” the 50 plus year interpretation of the persuader rules may be coming to an end.  After its implementation, the persuader rule was immediately challenged in litigation in Minnesota and Texas.  Late last year, the U.S. District Court in Texas issued a national injunction halting the enforcement of the rule pending the outcome of the litigation.    The government appealed and before the appeal could be heard the administration changed.

Recent court filings demonstrate the new administration may be rethinking whether it wants to continue trying to enforce the new persuader rules or perhaps even abandon the rule altogether.  In the Texas litigation, the Department of Justice filed an unopposed Motion for Extension of Time to file a response to the Court on the grounds that, “Acting Solicitor General, the Civil Division of the Department of Justice, and the new leadership at the Department of Labor are engaged in ongoing consultations regarding this litigation.  The government requires additional time to complete those consultations.”  A similar document in the form of a Joint Status Report was filed in the Minnesota litigation.

It is very likely the new administration is considering what to do about the persuader rule and the ongoing litigation; we may see a change very soon.  We will keep you posted on further developments.

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